Housing Market Perspectives Looks into Generation Shift from Renting to Buying

The key takeaways for this quarter’s Housing Market Perspectives are:

• U.S. households headed by someone 18 to 39 years old in 2019 are more likely to be renters today than their same-aged counterparts were in 2004.
• Millennials are closer to the historical norm for homeownership for their current ages than the typical member of Generation X was in 1994.
• The high share of young adults that rent today doesn’t suggest the Great Recession or other events have pushed them far off course.

According to Emmons’ report, a majority of the generations born in the 20th century transitioned into homeownership as they moved into middle age. The question is: Will today’s young adults be different? Emmons’ projections for 2019 are based on the Census Bureau’s annual data through 2018.

“As of 2016, the typical household headed by someone born in the 1980s (a millennial) appeared to be seriously behind all previous generations at a similar age in accumulating wealth,” Williams said. “A decline in the apparent income- and wealth-boosting power of higher education, due to a variety of causes, also darkens the outlook for this group.”

In the publication, Emmons explains that those born in 1980 or later were too young to experience the worst effects of the housing bubble and the Great Recession. So, while today’s under-40 group is undoubtedly off to a slow start financially, they do not carry the financial scars that previous generations do. Therefore millennials and members of Gen Z may not be that far away from becoming home owners.